Treasury's move to AT&T sparks Sprint protest

By Brad Bass

Mar 31, 1996

Sprint last month filed a protest with the General Accounting Office, claiming the government overestimated the savings that would accrue by switching the Treasury Department from Sprint to AT&T telecommunications service.

The company accused the General Services Administration of failing to correctly gauge Sprint's pricing when the agency ruled the government could save millions by transferring the Treasury account to AT&T.

GSA made the ruling late last year at the conclusion of a recompetition between the two FTS 2000 vendors for a percentage of the other vendor's business.

GSA said last November that price reductions resulting from the recompetition would save about $200 million per year and bring the price of an average long-distance call on AT&T's network down to about 3.5 cents per minute. AT&T officials have disputed that figure, and the Sprint protest cited flaws in GSA's decision that would keep the government from achieving the savings.

The protest said GSA misjudged the volume discounts Sprint could offer Treasury users. Sprint also claimed the transition will give AT&T more than 76 percent of the FTS 2000 revenue—a greater percentage than GSA specified in the solicitation for the recompetition.

John Okay, the deputy administrator at GSA's Federal Telecommunications Service, said the agency's contracting specialists and attorneys were reviewing the protest.

"We think Sprint is off base with this protest," he said. "Other than that, we have no comment."

AT&T Calls Accusations `Groundless'

John Doherty, vice president of AT&T Government Markets, said the protest was the latest in a series of maneuvers employed by Sprint to delay Treasury's move to AT&T. "Their accusations and charges are absolutely groundless," Doherty said. "This is nothing more than a tactic to stall the transition of the Department of the Treasury."

The protest said Treasury officials, now on Sprint's FTS 2000 network, were unable to verify that they would receive equivalent services at lower prices from AT&T. Consequently, Treasury telecommunications director Jim Flyzik ordered a halt to the department's transition to AT&T, according to the protest.

But Treasury telecom specialist Russ Westwood said the department's initial comparison between AT&T's and Sprint's pricing was erroneous because of an initial miscommunication between Treasury and AT&T that resulted in an "apples and oranges" comparison. He said the issue has been cleared up, and Treasury will proceed with the planned cutover to AT&T.

"There was never any holdup in the actual cutover," Westwood said.

Sprint also accused AT&T of structuring its volume discounts in a new and "highly selective manner" that fails to adhere to GSA's requirement that vendors base their prices on existing volume bands. The protest added that GSA's plans to begin its transition to the Post-FTS 2000 contract in 1998 will eat into volume discounts promised by AT&T.

Doherty said AT&T's pricing adhered to all the guidelines in GSA's solicitation. He added that his company has already started moving some Treasury locations to the AT&T network.

Sprint simultaneously filed a protest with GSA's Board of Contract Appeals protesting GSA's apparent intention to sell to AT&T an estimated $30 million worth of telecom equipment previously used by Treasury and Sprint for FTS 2000.

Jim Payne, Sprint's assistant vice president for FTS 2000, said Sprint hoped to use the equipment elsewhere and would like the government to allow companies to bid on it.